Uganda drops 12 positions in global business ranking

Traders in downtown Kampala. Photo by Faiswal Kasirye.

What you need to know:

Uganda was ranked 132nd out of 189 economies surveyed by the World Bank globally, down from 120th last year.

The failure to implement the required business reforms in the past year has cost Uganda 12 places in the global business ranking.

The new World Bank Doing Business Report 2014 released in Washington this week, shows that Uganda managed only one business reform by eliminating the need to have instruments of land physically stamped to certify payments of stamp duty.

This implies that the country is not making significant progress in improving the business environment for investors.

The executive director of Private Sector Foundation Uganda, Mr Gideon Badagawa, told the Daily Monitor that the decline is bad news for the country and the investors.

“Our environment is scaring away investors. Our regulatory reforms have been very slow. Access to credit, electricity, and transportation is still difficult in Uganda,” he said.

Mr Badagawa added: “The reform in the land registry has been very slow and it adds up to our poor ranking.”

The World Bank Doing Report reveals that Uganda was ranked 132nd out 189 economies surveyed by the World Bank globally. This compares with the 120th position Uganda attained last year out of 182 economies.

The report measures the efficiency and strength of laws, regulations and institutions that are relevant to domestic small and medium-sized companies throughout their life cycle.

By gathering and analysing comprehensive quantitative data to compare the business regulation environments across economies and over time, the survey aims at encouraging countries to adopt more effective regulations; offers measurable benchmarks for reform; and serves as a resource for academics, policymakers, private-sector executives and others interested in the business climate of each country.

Minister of state for investment Aridru Gabriel Gadison Ajedra told the Daily Monitor, yesterday that he had not seen the report but was shocked by the ranking.

“We have been trying to make some reforms by scraping outdated laws, and reducing on the number of licences required for investors to start business, which I believe would help us improve our ranking,” he said.

However, he said the speed at which reforms have been taking place in Uganda has been relatively slow.

Rwanda has been ranked number 32 out of 189 economies with eight reforms from number 114 last year; Burundi ranked 140 from 159 with six reforms.

Kenya has been ranked number 129 from 121 it was ranked last year with no reform over the last 12 months while Tanzania has been ranked number 145 from 134 last year with only one reform.

The report shows that Rwanda, Côte d’Ivoire, and Burundi were among the 10 economies that globally improved business laws.

The report’s data show that of the 47 economies in the region, 31 implemented at least one business regulatory reform in 2012/13. Rwanda implemented the most in the region, with reforms in eight of the 10 areas tracked by Doing Business.

“It is encouraging to see so many countries in Sub-Saharan Africa engaged in reforms aimed at reducing burdensome regulations and building up stronger legal institutions. In 2012/13, more than twice as many economies in the region reformed as in 2005,” said Mr Augusto Lopez-Claros, the director of global indicators and analysis at the World Bank Group.

Nonetheless, Mr Augusto said despite these achievements, more can be done to improve the quality of the rules in the country.

The report shows that economies with better business regulations are more likely to empower local entrepreneurs to create more jobs for local citizens.